Making Complex Simple

No more paper checks come January 1, 2014

WASHINGTON -- The Department of Health and Human Services (HHS) has released a final rule on the electronic transfer of funds between insurers and healthcare providers that the agency says will save billions of dollars and millions of pounds of paper.

The move sets the stage for insurers to eventually eliminate paper checks and instead transfer payments to healthcare providers electronically. The rule will save physicians and hospitals between $3 billion and $4.5 billion over the next decade, by saving paper, printing, and postage costs, as well as savings in staff time to manually process and deposit paper checks, according to HHS.

In addition, eliminating paper checks will save 800,000 pounds of paper each year, HHS said in a press release.

The rule was part of the Affordable Care Act (ACA) and requires the government to establish a uniform procedure for electronically transferring funds under the Health Insurance Portability and Accountability Act, also known as HIPAA.

Healthcare providers and others must comply with the electronic fund transfer rules by Jan. 1, 2014.

Specifically, the rule outlines a standard format for when a government health plan or private health insurer orders, authorizes, or initiates an electronic fund transfer with its financial institution; a second standard specifies the data content to be contained within the electronic fund transfer.

By standardizing the procedure, CMS hopes to spur more healthcare providers to trust that electronic funds transfers will be accurate.

One piece of the new rule requires the use of trace numbers that will allow healthcare providers to automatically match up a bill with its corresponding payment, rather than having an employee manually reconcile bills with payments received.

Encouraging the medical field to move away from paper checks has been a slow process, according to the Centers for Medicare and Medicaid Services (CMS), but has the potential to make the reimbursement process much more efficient.

"As a nurse, I know the importance of giving healthcare professionals time to focus on patient care," said CMS Acting Administrator Marilyn Tavenner, RN, in a press release. "The less time a physician has to spend on paperwork is that much more time that can be devoted to patient care. Having standardized procedures across the healthcare industry can only lead to lower costs and greater efficiencies all around."

The final rule is one of several rules stemming from the ACA that deal with administrative simplification. In July 2011, the agency released a proposed rule that would require insurers to provide uniform information and use uniform formats when communicating claims and coverage information to doctors. Healthcare providers would, in turn, need to use a standard information request when asking for patient-specific information, rather than requesting information in a variety of ways depending on the insurance company.

The two rules together are expected to save $16 billion over 10 years, according to a press release from HHS.

CMS acknowledged that health plans, including government plans, will incur some costs to acquire electronic fund transfer software, but added that the new rule won't cost doctors or hospitals anything because they will be the ones receiving, not transmitting, the payments.

Read original article from Medpage Today here.